If you set up a sports or fitness business do you need to complete a self-assessment tax return? And if so, when do you need to complete one?
Those working in the sports and fitness industry tend to have a passion beyond their own aspirations and for supporting others by passing on knowledge, experience, and advice. Whether as a gym instructor or someone who’s turning their love of sports coaching into a career, if you’re getting paid for your efforts, you may need to fill in a self-assessment tax return.
We discuss how to work out if you need to fill in a self-assessment tax return, dip into what this means if you do, and highlight some key dates so you don’t fall foul of HMRC deadlines.
Remember you may be required to fill in a self-assessment for other reasons than your sports or fitness business.
Do I need to fill in a self-assessment tax return?
If you receive money in return for your goods or services, then you may need to fill in a self-assessment tax return to declare this income and calculate how much tax you owe.
Employed by a company
If you are employed by a company – i.e. you are on a company’s payroll and are paid via PAYE – then your tax is already taken into account, so you can breathe a sigh of relief and get back to focusing on your clients. An example of this is a personal trainer who works solely for one gym and is on their payroll.
Working Casually Alongside Another Job
For example, if you coach casually for your local sports club and receive some money from your triathlon coaching, the key figure is your trading income – any income you receive in return for your coaching services.
If your trading income is £1,000 or less in a single tax year (6 April to 5 April) then this income is completely tax-free – go ahead and carry on supporting your club! What’s more, you do not need to inform HMRC or fill in a self-assessment tax return. This is due to the £1,000 tax-free trading allowance that HMRC introduced in 2017.
This trading allowance also applies to those who are employed in another job – so if you’re a regular member of the workforce paid via PAYE by day and a massage therapist by night, you’re covered up to the £1,000 limit. If you go over the £1,000 trading allowance, you’ll need to register as self-employed with HMRC and fill in an annual tax return.
It’s worth noting that if your other job is a self-employed business – for example working as a sole-trader endless pool installer – the £1,000 limit only applies once per person. So, once the total income for both your businesses reaches the £1,000 threshold, you’ll need to complete a self-assessment.
Running a sports or fitness business
If you have a self-employed business, you’re covered up to the same £1,000 trading allowance outlined above. However, once you tip over that within a single tax year (6 April to 5 April), you’ll need to register with HMRC as self-employed and fill in an annual tax return.
If you have set up your triathlon coaching business as a limited company rather than as a sole trader then you may still need to fill in a self-assessment tax return. Most limited company directors receive income through a combination of salary and dividends. Salary is taxed at source, however, dividends aren’t. Therefore, company directors receiving dividends must file a self-assessment tax return reporting all income and any tax liability due.
Self-assessment tax return key dates
The deadline for your online self-assessment tax return is 31 January of the following tax year. Any income for the tax year ending 5 April 2023 can be filed from 6 April 2023 with a deadline of 31 January 31 2024. Of course, it’s a good idea to file in good time just in case there are any issues that need tackling.
If you have established a sole-trader business, you also need to register as self-employed with HMRC by 5 October following the tax year you became eligible.
For example, if your trading income from sports coaching exceeded the £1,000 threshold in January 2023 this would be during the tax year ending 5 April 2023. You would be therefore required to register with HMRC by 5 October 2023.
Put any deadlines in your calendar and work towards them as you would with any other personal sports or fitness goals – with good planning, execution and of course fun!